EXHIBIT 2.1
CONFIDENTIAL
EXECUTION COPY
AGREEMENT AND PLAN OF
MERGER
BY AND BETWEEN
FLUSHING FINANCIAL
CORPORATION
AND
ATLANTIC LIBERTY FINANCIAL
CORP.
DECEMBER 20, 2005
TABLE OF CONTENTS
ARTICLE I CERTAIN
DEFINITIONS
ARTICLE II THE MERGER
|
|
2.1
|
Merger
|
|
|
|
2.2
|
Closing; Effective Time
|
|
|
|
2.3
|
Certificate of Incorporation and
Bylaws
|
|
|
|
2.4
|
Directors and Officers of Surviving
Corporation
|
|
|
2.5
|
Effects of the Merger
|
|
|
|
2.6
|
Tax Consequences
|
|
|
|
2.7
|
Possible Alternative
Structures
|
|
|
|
2.8
|
Additional Actions
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE III CONVERSION OF
SHARES
|
|
3.1
|
Conversion of ALFC Common Stock;
Merger Consideration
|
|
|
3.2
|
Election Procedures
|
|
|
|
3.3
|
Procedures for Exchange of ALFC
Common Stock
|
|
|
|
3.4
|
Treatment of ALFC Options
|
|
|
|
3.5
|
Bank Merger
|
|
|
|
3.6
|
Reservation of Shares
|
|
|
|
|
|
|
|
|
|
|
ARTICLE IV REPRESENTATIONS AND
WARRANTIES OF ALFC
|
|
4.1
|
Standard
|
|
|
|
4.2
|
Organization
|
|
|
|
4.3
|
Capitalization
|
|
|
|
4.4
|
Authority; No Violation
|
|
|
|
4.5
|
Consents
|
|
|
|
4.6
|
Financial Statements
|
|
|
|
4.7
|
Taxes
|
|
|
|
4.8
|
No Material Adverse
Effect
|
|
|
|
4.9
|
Material Contracts; Leases;
Defaults
|
|
|
|
4.10
|
Ownership of Property; Insurance
Coverage
|
|
|
|
4.11
|
Legal Proceedings
|
|
|
|
4.12
|
Compliance With Applicable
Law
|
|
|
|
4.13
|
Employee Benefit Plans
|
|
|
|
4.14
|
Brokers, Finders and Financial
Advisors
|
|
|
|
4.15
|
Environmental Matters
|
|
|
|
4.16
|
Loan Portfolio
|
|
|
|
4.17
|
Securities Documents
|
|
|
|
4.18
|
Related Party
Transactions
|
|
|
|
4.19
|
Deposits
|
|
|
|
4.20
|
Antitakeover Provisions
Inapplicable; Required Vote
|
|
|
4.21
|
Registration Obligations
|
|
|
|
4.22
|
Risk Management
Instruments
|
|
|
|
4.23
|
Fairness Opinion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.24
|
Intellectual Property
|
|
|
4.25
|
ALFC Information
|
|
ARTICLE V REPRESENTATIONS AND
WARRANTIES OF FFC
|
|
5.1
|
Standard
|
|
|
|
5.2
|
Organization
|
|
|
|
5.3
|
Capitalization
|
|
|
|
5.4
|
Authority; No Violation
|
|
|
|
5.5
|
Consents
|
|
|
|
5.6
|
Financial Statements
|
|
|
|
5.7
|
No Material Adverse
Effect
|
|
|
|
5.8
|
Legal Proceedings
|
|
|
|
5.9
|
Compliance With Applicable
Law.
|
|
|
|
5.10
|
Securities Documents
|
|
|
|
5.11
|
Brokers, Finders and Financial
Advisors
|
|
|
5.12
|
FFC Information
|
|
|
|
5.13
|
FFC Common Stock
|
|
|
|
5.14
|
Deposits
|
|
|
|
5.15
|
Risk Management
Instruments
|
|
|
|
5.16
|
Material Contracts
|
|
|
|
5.17
|
Employee Benefit Plans
|
|
|
|
5.18
|
Environmental Matters
|
|
|
|
5.19
|
Loan Portfolio
|
|
|
|
5.20
|
Taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE VI COVENANTS OF
ALFC
|
|
6.1
|
Conduct of Business
|
|
|
|
6.2
|
Current Information
|
|
|
|
6.3
|
Access to Properties and
Records
|
|
|
|
6.4
|
Financial and Other
Statements
|
|
|
|
6.5
|
Maintenance of Insurance
|
|
|
|
6.6
|
Disclosure Supplements
|
|
|
|
6.7
|
Consents and Approvals of Third
Parties
|
|
|
6.8
|
All Reasonable Efforts
|
|
|
|
6.9
|
Failure to Fulfill
Conditions
|
|
|
|
6.10
|
No Solicitation
|
|
|
|
6.11
|
Employee Benefits
|
|
|
|
6.12
|
Reserves and Merger-Related
Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE VII COVENANTS OF
FFC
|
|
7.1
|
Conduct of Business
|
|
|
|
7.2
|
Current Information and
Consultation
|
|
|
|
7.3
|
Disclosure Supplements
|
|
|
|
7.4
|
Consents and Approvals of Third
Parties
|
|
|
7.5
|
All Reasonable Efforts
|
|
|
|
7.6
|
Failure to Fulfill
Conditions
|
|
|
|
7.7
|
Employee Benefits; Advisory
Board
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.8
|
Directors and Officers
Indemnification and Insurance
|
|
|
7.9
|
Stock Listing
|
|
|
|
7.10
|
Stock and Cash Reserve
|
|
|
|
7.11
|
Section 16(b) Exemption
|
|
|
|
|
|
|
|
|
ARTICLE VIII REGULATORY AND OTHER
MATTERS
|
|
8.1
|
Meetings of Stockholders
|
|
|
|
8.2
|
Proxy Statement-Prospectus; Merger
Registration Statement
|
|
|
8.3
|
Regulatory Approvals
|
|
|
|
8.4
|
Affiliates
|
|
|
|
|
|
|
|
|
ARTICLE IX CLOSING
CONDITIONS
|
|
9.1
|
Conditions to Each Party’s
Obligations under this Agreement
|
|
|
9.2
|
Conditions to the Obligations of FFC
under this Agreement
|
|
|
|
9.3
|
Conditions to the Obligations of
ALFC under this Agreement
|
ARTICLE X THE CLOSING
|
|
10.1
|
Time and Place
|
|
|
|
10.2
|
Deliveries at the Pre-Closing and
the Closing
|
ARTICLE XI TERMINATION, AMENDMENT
AND WAIVER
|
|
11.1
|
Termination
|
|
|
|
11.2
|
Effect of Termination
|
|
|
|
11.3
|
Amendment, Extension and
Waiver
|
|
|
|
|
|
|
ARTICLE XII MISCELLANEOUS
|
|
12.1
|
Confidentiality
|
|
|
|
12.2
|
Public Announcements
|
|
|
12.3
|
Survival
|
|
|
|
12.4
|
Notices
|
|
|
|
12.5
|
Parties in Interest
|
|
|
|
12.6
|
Complete Agreement
|
|
|
|
12.7
|
Counterparts
|
|
|
|
12.8
|
Severability
|
|
|
|
12.9
|
Governing Law
|
|
|
|
12.10
|
Interpretation
|
|
|
|
12.11
|
Specific Performance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit A
|
Form of Plan of Bank
Merger
|
|
Exhibit B
|
Form of Voting Agreement
|
|
|
Exhibit C
|
Affiliates Agreement
|
|
|
|
|
|
|
CONFIDENTIAL
EXECUTION COPY
AGREEMENT AND PLAN OF
MERGER
This AGREEMENT AND PLAN OF MERGER
(this “Agreement”) is dated as of December 20, 2005, by
and between Flushing Financial Corporation, a Delaware corporation
(“FFC”), and Atlantic Liberty Financial Corp., a
Delaware corporation (“ALFC ”).
WHEREAS , the Board of Directors of each of FFC and ALFC
has (i) determined that this Agreement and the business combination
and related transactions contemplated hereby are in the best
interests of their respective companies and stockholders, (ii) has
determined that this Agreement and the transactions contemplated
hereby are consistent with and in furtherance of their respective
business strategies, and (iii) has approved this Agreement at
meetings of each of such Boards of Directors; and
WHEREAS , in accordance with the terms of this
Agreement, ALFC will merge with and into FFC (the
“Merger”) and immediately thereafter Atlantic Liberty
Savings, F.A., a wholly owned subsidiary of ALFC, will be merged
with and into Flushing Savings Bank, FSB a wholly owned subsidiary
of FFC (the “Bank Merger”); and
WHEREAS , as a condition to the willingness of FFC to
enter into this Agreement, each of the directors and executive
officers of ALFC have entered into a Voting Agreement,
substantially in the form of Exhibit B hereto, dated as of the date
hereof, with FFC (the “Voting Agreement”), pursuant to
which each such director or executive officer has agreed among
other things, to vote all shares of common stock of ALFC owned by
such person in favor of the approval of this Agreement and the
transactions contemplated hereby, upon the terms and subject to the
conditions set forth in such Voting Agreement; and
WHEREAS , the parties intend the Merger to qualify as a
reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the “Code”);
and
WHEREAS , the parties desire to make certain
representations, warranties and agreements in connection with the
business transactions described in this Agreement and to prescribe
certain conditions thereto.
NOW, THEREFORE
in consideration of the mutual
covenants, representations, warranties and agreements herein
contained and of other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
CERTAIN
DEFINITIONS
As used in this Agreement the
following terms have the following meanings (unless the context
otherwise requires, references to Articles and Sections refer to
Articles and Sections of this Agreement).
“Affiliate” means any
Person who directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such Person and, without limiting the generality of
the foregoing, includes any executive officer or director of such
Person and any Affiliate of such executive officer or
director.
“Agreement” means this
agreement, and any amendment hereto.
“ALFC” shall mean
Atlantic Liberty Financial Corp., a Delaware corporation, with its
principal offices located at 186 Montague Street, Brooklyn, New
York 11201.
“ALFC Common Stock”
shall mean the common stock, par value $0.10 per share, of
ALFC.
“ALFC Disclosure
Schedule” shall mean a written disclosure schedule delivered
by ALFC to FFC specifically referring to the appropriate section of
this Agreement.
“ALFC ESOP” shall mean
the Atlantic Liberty Savings, F.A. Employee Stock Ownership
Plan.
“ALFC Financial
Statements” shall mean (i) the audited consolidated
statements of financial condition (including related notes and
schedules, if any) of ALFC as of March 31, 2005 and 2004 and the
consolidated statements of income, changes in stockholders’
equity and cash flows (including related notes and schedules, if
any) of ALFC for each of the two years ended March 31, 2005 and
2004, as set forth in ALFC’s annual report for the year ended
March 31, 2005 and (ii) the unaudited interim consolidated
financial statements of ALFC as of the end of each calendar quarter
following March 31, 2005 and for the periods then ended, as filed
by ALFC in its Securities Documents.
“ALFC Group” means any
combined, unitary, consolidated or other affiliated group within
the meaning of Section 1504 of the Code or otherwise, of which ALFC
or any ALFC Subsidiary is or has been a member for Tax
purposes.
“ALFC Stock Benefit
Plan” shall mean the ALFC 2003 Incentive Stock Benefit Plan,
and any and all amendments thereto.
“ALFC Option” shall mean
an option to purchase shares of ALFC Common Stock granted pursuant
to the ALFC Stock Benefit Plan and outstanding as of the date
hereof, as set forth in ALFC Disclosure Schedule 4.3.1.
“ALFC Stockholders
Meeting” shall have the meaning set forth in Section
8.1.1.
“ALFC Subsidiary” means
any corporation, 50% or more of the capital stock of which is
owned, either directly or indirectly, by ALFC or Atlantic Liberty
Savings, F.A., except any corporation the stock of which is held in
the ordinary course of the lending activities of Atlantic Liberty
Savings, F.A.
“Atlantic Liberty Savings,
F.A.” shall mean Atlantic Liberty Savings, F.A., a federally
chartered savings association, with its principal offices located
at 186 Montague Street, Brooklyn, New York 11201, which is a wholly
owned subsidiary of ALFC.
“Bank Merger” shall mean
the merger of Atlantic Liberty Savings, F.A. with and into Flushing
Savings Bank, FSB, with Flushing Savings Bank, FSB as the surviving
institution, which merger shall occur immediately following the
Merger.
“Bank Regulator” shall
mean any Federal or state banking regulator, including but not
limited to the OTS and the FDIC, which regulates Flushing Savings
Bank, FSB or Atlantic Liberty Savings, F.A., or any of their
respective holding companies or subsidiaries, as the case may
be.
“Cash Consideration”
shall have the meaning set forth in Section 3.1.3.
“Cash Election” shall
have the meaning set forth in Section 3.2.2.
“Cash Election Shares”
shall have the meaning set forth in Section 3.2.1.
“Cash/Stock
Consideration” shall have the meaning set forth in Section
3.1.3.
“Certificate” shall mean
a certificate evidencing shares of ALFC Common Stock.
“COBRA” shall mean the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.
“Code” shall mean the
Internal Revenue Code of 1986, as amended.
“Confidentiality
Agreements” shall mean the confidentiality agreements
referred to in Section 12.1 of this Agreement.
“DGCL” shall mean the
Delaware General Corporation Law.
“Dissenting Shares”
shall have the meaning set forth in Section 3.1.4.
“Dissenting Stockholder”
shall have the meaning set forth in Section 3.1.4.
“Effective Time” shall
mean the date and time specified pursuant to Section 2.2 hereof as
the effective time of the Merger.
“Election Deadline”
shall have the meaning set forth in Section 3.2.3.
“Election Form” shall
have the meaning set forth in Section 3.2.2.
“Election Form Record
Date” shall have the meaning set forth in Section
3.2.2.
“Environmental Laws”
means any applicable Federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement
with any governmental entity relating to (1) the protection,
preservation or restoration of the environment (including, without
limitation, air, water vapor, surface water, groundwater, drinking
water supply, surface soil, subsurface soil, plant and animal life
or any other natural resource), and/or (2) the exposure to, or the
use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of
Materials of Environmental Concern. The term Environmental Law
includes without limitation (a) the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C.
§9601, et seq; the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. §6901, et seq; the Clean Air Act, as
amended, 42 U.S.C. §7401, et seq; the Federal Water Pollution
Control Act, as amended, 33 U.S.C. §1251, et seq; the Toxic
Substances Control Act, as amended, 15 U.S.C. §2601, et seq;
the Emergency Planning and Community Right to Know Act, 42 U.S.C.
§11001, et seq; the Safe Drinking Water Act, 42 U.S.C.
§300f, et seq; and all comparable state and local laws, and
(b) any common law (including without limitation common law that
may impose strict
liability) that may impose liability
or obligations for injuries or damages due to the presence of or
exposure to any Materials of Environmental Concern.
“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as
amended.
“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.
“Exchange Agent” shall
mean EquiServe Trust Company NA, or such other bank or trust
company or other agent designated by FFC, and reasonably acceptable
to ALFC, which shall act as agent for FFC in connection with the
exchange procedures for exchanging Certificates for the Merger
Consideration.
“Exchange Fund” shall
have the meaning set forth in Section 3.3.1.
“Exchange Ratio” shall
have the meaning set forth in Section 3.1.3.
“FDIC” shall mean the
Federal Deposit Insurance Corporation or any successor
thereto.
“FFC” shall mean
Flushing Financial Corporation, a Delaware corporation, with its
principal executive offices located at 1979 Marcus Avenue, Suite
E140, Lake Success, New York 11042.
“FFC Common Stock” shall
mean the common stock, par value $0.01 per share, of
FFC.
“FFC Disclosure
Schedule” shall mean a written disclosure schedule delivered
by FFC to ALFC specifically referring to the appropriate section of
this Agreement.
“FFC Financial
Statements” shall mean the (i) the audited consolidated
statements of financial condition (including related notes and
schedules) of FFC as of December 31, 2004 and 2003 and the
consolidated statements of income, changes in stockholders’
equity and cash flows (including related notes and schedules, if
any) of FFC for each of the three years ended December 31, 2004,
2003 and 2002, as set forth in FFC’s annual report for the
year ended December 31, 2004, and (ii) the unaudited interim
consolidated financial statements of FFC as of the end of each
calendar quarter following December 31, 2004 and for the periods
then ended, as filed by FFC in its Securities Documents.
“FFC Group” means any
combined, unitary, consolidated or other affiliated group within
the meaning of Section 1504 of the Code or otherwise, of which FFC
or any FFC Subsidiary is or has been a member for Tax
purposes.
“FFC Rights Agreement”
shall mean the Rights Agreement, dated as of September 17, 1996,
between FFC and State Street Bank and Trust Company, as rights
agent, relating to FFC’s Series A Junior Participating
Preferred Stock.
“FFC Stock Benefit
Plans” shall mean the FFC 2005 Omnibus Incentive Plan, the
FFC 1996 Stock Option Incentive Plan and the FFC 1996 Restricted
Stock Incentive Plan.
“FFC Stock Purchase
Rights” shall mean the Rights to purchase units of
FFC’s Series A Junior Participating Preferred Stock in
accordance with the terms of the FFC Rights Agreement.
“FFC Subsidiary” means
any substantial corporation or limited liability company, 50% or
more of the capital stock of which is owned, either directly or
indirectly, by FFC or Flushing Savings Bank,
FSB, except any corporation the
stock of which is held in the ordinary course of the lending
activities of Flushing Savings Bank, FSB.
“FHLB” shall mean the
Federal Home Loan Bank of New York.
“Flushing Savings Bank,
FSB” shall mean Flushing Savings Bank, FSB, a federally
chartered savings bank, with its principal offices located at 1979
Marcus Avenue, Suite E140, Lake Success, New York 11042, which is a
wholly owned subsidiary of FFC.
“GAAP” shall mean
accounting principles generally accepted in the United States of
America.
“Governmental Entity”
shall mean any Federal or state court, administrative agency or
commission or other governmental authority or
instrumentality.
“HOLA” shall mean the
Home Owners’ Loan Act, as amended.
“Intellectual Property”
shall have the meaning set forth in section 4.24.
“IRS” shall mean the
United States Internal Revenue Service.
“Knowledge” as used with
respect to a Person (including references to such Person being
aware of a particular matter) means those facts that are known by
the executive officers and directors of such Person, and includes
any facts, matters or circumstances set forth in any written notice
from any Bank Regulator or any other material written notice
received by an executive officer or director of that
Person.
“Mailing Date” shall
having the meaning set forth in Section 3.2.2.
“Material Adverse
Effect” shall mean, with respect to FFC or ALFC,
respectively, any effect that (i) is material and adverse to the
financial condition, results of operations or business of FFC and
the FFC Subsidiaries taken as a whole, or ALFC and the ALFC
Subsidiaries taken as a whole, respectively, or (ii) does or would
materially impair the ability of either ALFC, on the one hand, or
FFC, on the other hand, to perform its obligations under this
Agreement or otherwise materially threaten or materially impede the
consummation of the transactions contemplated by this Agreement;
provided that “Material Adverse Effect” shall not be
deemed to include the impact of (a) changes in laws and regulations
affecting banks or thrift institutions generally, or
interpretations thereof by Courts or governmental agencies, (b)
changes in GAAP or regulatory accounting principles generally
applicable to financial institutions and their holding companies,
(c) actions and omissions of a party hereto (or any of its
Subsidiaries) taken with the prior written consent of the other
party, (d) the announcement of this Agreement and the transactions
contemplated hereby, and compliance with this Agreement on the
business, financial condition or results of operations of the
parties and their respective Subsidiaries, including the expenses
incurred by the parties hereto in consummating the transactions
contemplated by this Agreement (consistent with the information
included in the Disclosure Schedules), and (e) any change in the
value of the securities or loan portfolio of FFC or ALFC,
respectively, whether held as available for sale or held to
maturity, resulting from a change in interest rates
generally.
“Materials of Environmental
Concern” means pollutants, contaminants, wastes, toxic
substances, petroleum and petroleum products, and any other
materials regulated under Environmental Laws, including, but not
limited to, radon, radioactive material, asbestos,
asbestos-containing material, urea formaldehyde foam insulation,
lead, polychlorinated biphenyl, flammables and
explosives.
“Merger” shall mean the
merger of ALFC with and into FFC pursuant to the terms
hereof.
“Merger Consideration”
shall mean the cash or FFC Common Stock, or combination thereof, in
an aggregate per share amount to be paid by FFC for each share of
ALFC Common Stock, as set forth in Section 3.1.
“Merger Registration
Statement” shall mean the registration statement, together
with all amendments, filed with the SEC under the Securities Act
for the purpose of registering shares of FFC Common Stock to be
offered to holders of ALFC Common Stock in connection with the
Merger.
“Mixed Election” shall
have the meaning set forth in Section 3.2.2.
“NASD” shall mean the
National Association of Securities Dealers, Inc.
“NASDAQ” shall mean the
Nasdaq National Market.
“Non-Election” shall
have the meaning set forth in Section 3.2.2.
“Non-Election Shares”
shall having the meaning set forth in Section 3.2.1.
“OTS” shall mean the
Office of Thrift Supervision or any successor thereto.
“PBGC” shall mean the
Pension Benefit Guaranty Corporation or any successor
thereto.
“Pension Plan” shall
have the meaning set forth in Section 4.13.2.
“Person” shall mean any
individual, corporation, partnership, joint venture, association,
trust or “group” (as that term is defined under the
Exchange Act).
“Pre-Effective Time Tax
Period” means any taxable period (or the allocable portion of
a Straddle Period) ending on or before the close of business on the
date the Effective Time occurs.
“Proxy
Statement-Prospectus” shall have the meaning set forth in
Section 8.2.1.
“Regulatory Agreement”
shall have the meaning set forth in Section 4.12.3.
“Regulatory Approvals”
means the approval of any Bank Regulator that is necessary in
connection with the consummation of the Merger, the Bank Merger and
the related transactions contemplated by this Agreement.
“Representative” shall
have the meaning set forth in Section 3.2.2.
“Rights” shall mean
warrants, options, rights, convertible securities, stock
appreciation rights and other arrangements or commitments which
obligate an entity to issue or dispose of any of its capital stock
or other ownership interests or which provide for compensation
based on the equity appreciation of its capital stock.
“SBA” shall mean the
Small Business Administration or any successor thereto.
“SEC” shall mean the
Securities and Exchange Commission or any successor
thereto.
“Securities Act” shall
mean the Securities Act of 1933, as amended.
“Securities Documents”
shall mean all reports, offering circulars, proxy statements,
registration statements and all similar documents filed pursuant to
the Securities Laws.
“Securities Laws” shall
mean the Securities Act; the Exchange Act; the Investment Company
Act of 1940, as amended; the Investment Advisers Act of 1940, as
amended; the Trust Indenture Act of 1939, as amended, and the rules
and regulations of the SEC promulgated thereunder.
“Shortfall Number” shall
have the meaning set forth in Section 3.2.5.
“Significant Subsidiary”
shall have the meaning set forth in Rule 1-02 of Regulation S-X of
the SEC.
“Stock Consideration”
shall have the meaning set forth in Section 3.1.3.
“Stock Conversion
Number” shall have the meaning set forth in Section
3.2.1.
“Stock Election” shall
have the meaning set forth in Section 3.2.2.
“Stock Election Number”
shall have the meaning set forth in Section 3.2.1.
“Stock Election Shares”
shall have the meaning set forth in Section 3.2.1.
“Straddle Period” means
any taxable period that includes (but does not end on) the date of
the Effective Time.
“Surviving Corporation”
shall have the meaning set forth in Section 2.1.
“Tax” means any and all
(a) Federal, state, local or foreign tax, fee or other like
assessment or charge of any kind, including, without limitation,
any net income, alternative or add-on minimum tax, gross income,
gross receipts, sales, use, ad valorem, value-added, transfer,
franchise, profits, license, withholding on amounts paid to or by
the taxpayer, payroll, employment, excise, severance, stamp,
capital stock, occupation, property, environmental or windfall tax,
premium, customs duty or other tax, together with any interest,
penalty additions to tax; (b) liability for the payment of Tax as
the result of membership in the ALFC Group and (c) transferee or
secondary liability in respect of any Tax (whether imposed by law
or contractual arrangement).
“Tax Return” means any
return (including estimated returns), declaration, report, claim
for refund, or information return or statement relating to Taxes,
including any such document prepared on an affiliate ,
consolidated, combined or unitary group basis and any schedule or
attachment thereto.
“Taxing Authority” means
any governmental or regulatory authority, body or instrumentality
exercising any authority to impose, regulate or administer the
imposition of Taxes.
“Termination Date” shall
mean July 15, 2006.
“Treasury Stock” shall
have the meaning set forth in Section 3.1.2.
Other terms used herein are defined
in the preamble and elsewhere in this Agreement.
ARTICLE II
THE MERGER
Subject to the terms and conditions
of this Agreement, at the Effective Time: (a) ALFC shall merge with
and into FFC, with FFC as the resulting or surviving corporation
(the “Surviving Corporation”); and (b) the separate
existence of ALFC shall cease and all of the rights, privileges,
powers, franchises, properties, assets, liabilities and obligations
of ALFC shall be vested in and assumed by FFC. As part of the
Merger, each share of ALFC Common Stock will be converted into the
right to receive the Merger Consideration pursuant to the terms of
Article III hereof. Immediately after the Merger, Atlantic Liberty
Savings, F.A. shall merge with and into Flushing Savings Bank, FSB,
with Flushing Savings Bank, FSB as the resulting
institution.
|
|
2.2
|
Closing; Effective
Time.
|
Subject to the satisfaction or
waiver of all conditions to closing contained in Article IX hereof,
the Closing shall occur no later than five business days following
the latest to occur of (i) the receipt of all required Regulatory
Approvals, and the expiration of any applicable waiting periods,
(ii) the approval of the Merger by the stockholders of ALFC, or
(iii) at such other date or time upon which FFC and ALFC mutually
agree (the “Closing”). The Merger shall be effected by
the filing of a certificate of merger with the Delaware Office of
the Secretary of State on the day of the Closing (the
“Closing Date”), in accordance with the DGCL. The
“Effective Time” means the date and time upon which the
certificate of merger is filed with the Delaware Office of the
Secretary of State, or as otherwise stated in the certificate of
merger, in accordance with the DGCL.
|
|
2.3
|
Certificate of Incorporation and
Bylaws.
|
The Certificate of Incorporation and
Bylaws of FFC as in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation and Bylaws of the
Surviving Corporation, until thereafter amended as provided therein
and by applicable law.
|
|
2.4
|
Directors and Officers of
Surviving Corporation.
|
The directors of FFC immediately
prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and Bylaws of the Surviving
Corporation. Until changed in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, the officers
of FFC immediately prior to the Effective Time shall be the initial
officers of Surviving Corporation, in each case until their
respective successors are duly elected or appointed and
qualified.
|
|
2.5
|
Effects of the
Merger.
|
At and after the Effective Time, the
Merger shall have the effects as set forth in the DGCL.
It is intended that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of
the Code, and that this Agreement shall constitute a “plan of
reorganization” as that term is used in Sections 354 and 361
of the Code. From and after the date of this Agreement and until
the Closing,
each party hereto shall use its
reasonable best efforts to cause the Merger to qualify, and will
not knowingly take any action, cause any action to be taken, fail
to take any action or cause any action to fail to be taken which
action or failure to act could prevent the Merger from qualifying
as a reorganization under Section 368(a) of the Code. Following the
Closing, neither FFC, ALFC nor any of their Affiliates shall
knowingly take any action, cause any action to be taken, fail to
take any action or cause any action to fail to be taken, which
action or failure to act could cause the Merger to fail to qualify
as a reorganization under Section 368(a) of the Code. FFC and ALFC
each hereby agrees to deliver certificates substantially in
compliance with IRS published advance ruling guidelines, with
customary exceptions and modifications thereto, to enable counsel
to deliver the legal opinions contemplated by Section 9.1.6, which
certificates shall be effective as of the date of such
opinions.
|
|
2.7
|
Possible Alternative
Structures.
|
Notwithstanding anything to the
contrary contained in this Agreement and subject to the
satisfaction of the conditions set forth in Article IX, prior to
the Effective Time FFC shall be entitled to revise the structure of
the Merger described in Section 2.1 hereof, provided that (i) FFC
shall have received an opinion of counsel to FFC that there are no
adverse Federal or state income tax consequences to ALFC
stockholders as a result of the modification; (ii) the
consideration to be paid to the holders of ALFC Common Stock under
this Agreement is not thereby changed in kind or value or reduced
in amount; and (iii) such modification will not delay materially,
or jeopardize receipt of any required regulatory approvals or other
consents and approvals relating to the consummation of the Merger
or otherwise cause any condition to closing not to be capable of
being fulfilled. The parties hereto agree to appropriately amend
this Agreement and any related documents in order to reflect any
such revised structure.
If, at any time after the Effective
Time, FFC shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or
desirable to (i) vest, perfect or confirm, of record or otherwise,
in FFC its right, title or interest in, to or under any of the
rights, properties or assets of ALFC or Atlantic Liberty Savings,
F.A., or (ii) otherwise carry out the purposes of this Agreement,
ALFC and its officers and directors shall be deemed to have granted
to FFC an irrevocable power of attorney to execute and deliver all
such deeds, assignments or assurances in law or take any other acts
as are necessary or desirable to (a) vest, perfect or confirm, of
record or otherwise, in FFC its right, title or interest in, to or
under any of the rights, properties or assets of ALFC or Atlantic
Liberty Savings, F.A. or (b) otherwise carry out the purposes of
this Agreement, and the officers and directors of FFC are
authorized in the name of ALFC or Atlantic Liberty Savings, F.A. or
otherwise to take any and all such action.
ARTICLE III
CONVERSION OF
SHARES
|
|
3.1
|
Conversion of ALFC Common Stock;
Merger Consideration.
|
At the Effective Time, by virtue of
the Merger and without any action on the part of FFC, ALFC or the
holders of any of the shares of ALFC Common Stock, the Merger shall
be effected in accordance with the following terms:
3.1.1 Each
share of FFC Common Stock that is issued and outstanding
immediately prior to the Effective Time shall remain issued and
outstanding following the Effective Time and shall be unchanged by
the Merger.
3.1.2 All
shares of ALFC Common Stock held in the treasury of ALFC and each
share of ALFC Common Stock owned by FFC or any direct or indirect
wholly owned subsidiary of FFC or of ALFC immediately prior to the
Effective Time (other than shares held in a fiduciary capacity or
in connection with debts previously contracted) (“Treasury
Stock”) shall, at the Effective Time, cease to exist, and the
certificates for such shares shall be canceled as promptly as
practicable thereafter, and no payment or distribution shall be
made in consideration therefor.
3.1.3 Each
share of ALFC Common Stock issued and outstanding immediately prior
to the Effective Time (other than Treasury Stock and Dissenting
Shares) shall become and be converted into, as provided in and
subject to the limitations set forth in this Agreement, the right
to receive at the election of the holder thereof as provided in
Section 3.2 either (i) $24.00 in cash (the “Cash
Consideration”); (ii) 1.4300 shares (the “Exchange
Ratio”) of FFC Common Stock (the “Stock
Consideration”); or (iii) a combination of the Cash
Consideration and the Stock Consideration, as provided in Section
3.2 (the “Cash/Stock Consideration”). The Cash
Consideration and the Stock Consideration are sometimes referred to
herein collectively as the “Merger
Consideration.”
3.1.4 Each
outstanding share of ALFC Common Stock the holder of which has
perfected his right to dissent under the DGCL and has not
effectively withdrawn or lost such right as of the Effective Time
(the “Dissenting Shares”) shall not be converted into
or represent a right to receive the Merger Consideration hereunder,
and the holder thereof shall be entitled only to such rights as are
granted by the DGCL. ALFC shall give FFC prompt notice upon receipt
by ALFC of any such demands for payment of the fair value of such
shares of ALFC Common Stock and of withdrawals of such notice and
any other instruments provided pursuant to applicable law (any
stockholder duly making such demand being hereinafter called a
“Dissenting Stockholder”), and FFC shall have the right
to participate in all negotiations and proceedings with respect to
any such demands. ALFC shall not, except with the prior written
consent of FFC, voluntarily make any payment with respect to, or
settle or offer to settle, any such demand for payment, or waive
any failure to timely deliver a written demand for appraisal or the
taking of any other action by such Dissenting Stockholder as may be
necessary to perfect appraisal rights under the DGCL. Any payments
made in respect of Dissenting Shares shall be made by the Surviving
Company.
3.1.5 If
any Dissenting Stockholder shall effectively withdraw or lose
(through failure to perfect or otherwise) his right to such payment
at or prior to the Effective Time, such holder’s shares of
ALFC Common Stock shall be converted into a right to receive the
Merger Consideration in accordance with the applicable provisions
of this Agreement. If such holder shall effectively withdraw or
lose (through failure to perfect or otherwise) his right to such
payment after the Effective Time (or the Election Deadline, as
defined below), each share of ALFC Common Stock of such holder
shall be treated as a Non-Election Share.
3.1.6 After
the Effective Time, shares of ALFC Common Stock shall no longer be
outstanding and shall automatically be canceled and shall cease to
exist, and shall thereafter by operation of this section be the
right to receive the Merger Consideration.
3.1.7 In
the event FFC changes (or establishes a record date for changing)
the number of, or provides for the exchange of, shares of FFC
Common Stock issued and outstanding prior to the Effective Time as
a result of a stock split, stock dividend, recapitalization,
reclassification, or similar transaction with respect to the
outstanding FFC Common Stock and the record date therefor shall be
prior to the Effective Time, the Exchange Ratio shall be
proportionately and appropriately adjusted; provided, that
no such adjustment shall be made with regard to FFC Common Stock if
FFC issues additional shares of FFC Common Stock and receives fair
market value consideration for such shares.
3.2.1 Holders
of ALFC Common Stock may elect to receive shares of FFC Common
Stock or cash (in either case without interest) in exchange for
their shares of ALFC Common Stock in accordance with the following
procedures, provided that, in the aggregate, and subject to the
provisions of Section 3.2.6, 65% of the total number of shares of
ALFC Common Stock issued and outstanding at the Effective Time,
including any Dissenting Shares but excluding any Treasury Stock
(the “Stock Conversion Number”), shall be converted
into the Stock Consideration and the remaining outstanding shares
of ALFC Common Stock shall be converted into the Cash
Consideration. Shares of ALFC Common Stock as to which a Cash
Election (including, pursuant to a Mixed Election) has been made
are referred to herein as “Cash Election Shares.”
Shares of ALFC Common Stock as to which a Stock Election has been
made (including, pursuant to a Mixed Election) are referred to as
“Stock Election Shares.” Shares of ALFC Common Stock as
to which no election has been made (or as to which an Election Form
is not returned properly completed) are referred to herein as
“Non-Election Shares.” The aggregate number of shares
of ALFC Common Stock with respect to which a Stock Election has
been made is referred to herein as the “Stock Election
Number.” Any Dissenting Shares shall be deemed to be Cash
Election Shares, and the holders thereof shall in no event receive
consideration comprised of FFC Common Stock with respect to such
shares.
3.2.2 An
election form and other appropriate and customary transmittal
materials (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon
proper delivery of such Certificates to the Exchange Agent), in
such form as ALFC and FFC shall mutually agree (“Election
Form”), shall be mailed 40 days prior to the anticipated
Effective Time or on such earlier date as FFC and ALFC shall
mutually agree (the “Mailing Date”) to each holder of
record of ALFC Common Stock as of five business days prior to the
Mailing Date (the “Election Form Record Date”). Each
Election Form shall permit such holder, subject to the allocation
and election procedures set forth in this Section 3.2, (i) to elect
to receive the Cash Consideration for all of the shares of ALFC
Common Stock held by such holder (a “Cash Election”),
in accordance with Section 3.1.3, (ii) to elect to receive the
Stock Consideration for all of such shares (a “Stock
Election”), in accordance with Section 3.1.3, (iii) to elect
to receive the Stock Consideration for a part of such
holder’s ALFC Common Stock and the Cash Consideration for the
remaining part of such holder’s ALFC Common Stock (a
“Mixed Election”), or (iv) to indicate that such record
holder has no preference as to the receipt of cash or FFC Common
Stock for such shares (a “Non-Election”). A holder of
record of shares of ALFC Common Stock who holds such shares as
nominee, trustee or in another representative capacity (a
“Representative”) may submit multiple Election Forms,
provided that each such Election Form covers all the shares of ALFC
Common Stock held by such Representative for a particular
beneficial owner. Any shares of ALFC Common Stock with respect to
which the holder thereof shall not, as of the Election Deadline,
have made an election by submission to the Exchange Agent of an
effective, properly completed Election Form shall be deemed
Non-Election Shares. All Dissenting Shares shall be
deemed
shares subject to a Cash Election,
and with respect to such shares the holders thereof shall in no
event receive consideration comprised of FFC Common Stock, subject
to Section 3.1.5 hereof.
3.2.3 To
be effective, a properly completed Election Form shall be submitted
to the Exchange Agent on or before 5:00 p.m., New York City time,
on the 20 th day following the Mailing Date (or such
other time and date as FFC and ALFC may mutually agree) (the
“Election Deadline”); provided, however , that
the Election Deadline may not occur on or after the Closing Date;
and provided further that the Election Deadline may not occur prior
to the seventh business day after receipt of all Regulatory
Approvals (excluding the expiration of any applicable waiting
periods). ALFC shall make available up to two separate Election
Forms, or such additional Election Forms as FFC may permit, to all
persons who become holders (or beneficial owners) of ALFC Common
Stock between the Election Form Record Date and the close of
business on the business day prior to the Election Deadline. ALFC
shall provide to the Exchange Agent all information reasonably
necessary for it to perform as specified herein. An election shall
have been properly made only if the Exchange Agent shall have
actually received a properly completed Election Form by the
Election Deadline. An Election Form shall be deemed properly
completed only if accompanied by one or more Certificates (or
customary affidavits and indemnification regarding the loss or
destruction of such Certificates or the guaranteed delivery of such
Certificates) representing all shares of ALFC Common Stock covered
by such Election Form, together with duly executed transmittal
materials included with the Election Form. If an ALFC stockholder
either (i) does not submit a properly completed Election Form in a
timely fashion or (ii) revokes its Election Form prior to the
Election Deadline, the shares of ALFC Common Stock held by such
stockholder shall be designated as Non-Election Shares. Any
Election Form may be revoked or changed by the person submitting
such Election Form to the Exchange Agent by written notice to the
Exchange Agent only if such notice of revocation or change is
actually received by the Exchange Agent at or prior to the Election
Deadline. FFC shall cause the Certificate or Certificates relating
to any revoked Election Form to be promptly returned without charge
to the person submitting the Election Form to the Exchange Agent.
Subject to the terms of this Agreement and of the Election Form,
the Exchange Agent shall have discretion to determine when any
election, modification or revocation is received and whether any
such election, modification or revocation has been properly
made.
3.2.4 If
the Stock Election Number exceeds the Stock Conversion Number, then
all Cash Election Shares and all Non-Election Shares shall be
converted into the right to receive the Cash Consideration, and,
subject to Section 3.2.7 hereof, each holder of Stock Election
Shares will be entitled to receive the Stock Consideration only
with respect to that number of Stock Election Shares held by such
holder equal to the product obtained by multiplying (x) the number
of Stock Election Shares held by such holder by (y) a fraction, the
numerator of which is the Stock Conversion Number and the
denominator of which is the Stock Election Number, with the
remaining number of such holder’s Stock Election Shares being
converted into the right to receive the Cash
Consideration.
3.2.5 If
the Stock Election Number is less than the Stock Conversion Number
(the amount by which the Stock Conversion Number exceeds the Stock
Election Number being referred to herein as the “Shortfall
Number”), then all Stock Election Shares shall be converted
into the right to receive the Stock Consideration and the
Non-Election Shares and Cash Election Shares shall be treated in
the following manner:
(A) if
the Shortfall Number is less than or equal to the number of
Non-Election Shares, then all Cash Election Shares shall be
converted into the right to receive the Cash Consideration and,
subject to Section 3.2.7 hereof, each holder of Non-Election Shares
shall receive the Stock Consideration in respect of that number of
Non-Election Shares held by such holder equal to the product
obtained by multiplying (x) the number of Non-Election
Shares
held by such holder by (y) a
fraction, the numerator of which is the Shortfall Number and the
denominator of which is the total number of Non-Election Shares,
with the remaining number of such holder’s Non-Election
Shares being converted into the right to receive the Cash
Consideration; or
(B) if
the Shortfall Number exceeds the number of Non-Election Shares,
then all Non- Election Shares shall be converted into the right to
receive the Stock Consideration, and, subject to Section 3.2.7
hereof, each holder of Cash Election Shares shall receive the Stock
Consideration in respect of that number of Cash Election Shares
held by such holder equal to the product obtained by multiplying
(x) the number of Cash Election Shares held by such holder by (y) a
fraction, the numerator of which is the amount by which (1) the
Shortfall Number exceeds (2) the total number of Non-Election
Shares and the denominator of which is the total number of Cash
Election Shares, with the remaining number of such holder’s
Cash Election Shares being converted into the right to receive the
Cash Consideration.
3.2.6
No Fractional Shares . Notwithstanding anything to the
contrary contained herein, no certificates or scrip representing
fractional shares of FFC Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution
with respect to FFC Common Stock shall be payable on or with
respect to any fractional share interest, and such fractional share
interests shall not entitle the owner thereof to vote or to any
other rights of a stockholder of FFC. In lieu of the issuance of
any such fractional share, FFC shall pay to each former holder of
ALFC Common Stock who otherwise would be entitled to receive a
fractional share of FFC Common Stock, an amount in cash, rounded to
the nearest cent and without interest, equal to the product of (i)
the fraction of a share to which such holder would otherwise have
been entitled and (ii) the average of the daily closing sales
prices of a share of FFC Common Stock as reported on the NASDAQ for
the five consecutive trading days immediately preceding the Closing
Date. For purposes of determining any fractional share interest,
all shares of ALFC Common Stock owned by a ALFC stockholder shall
be combined so as to calculate the maximum number of whole shares
of FFC Common Stock issuable to such ALFC stockholder.
|
|
3.3
|
Procedures for Exchange of ALFC
Common Stock.
|
3.3.1
FFC to Make Merger Consideration Available . After the
Election Deadline and no later than the day prior to the Closing
Date, FFC shall deposit, or shall cause to be deposited, with the
Exchange Agent for the benefit of the holders of ALFC Common Stock,
for exchange in accordance with this Section 3.3, certificates
representing the shares of FFC Common Stock and an aggregate amount
of cash sufficient to pay the aggregate amount of cash payable
pursuant to this Article III (including the estimated amount of
cash to be paid in lieu of fractional shares of ALFC Common Stock)
(such cash and certificates for shares of FFC Common Stock,
together with any dividends or distributions with respect thereto
(without any interest thereon) being hereinafter referred to as the
“Exchange Fund”).
3.3.2
Exchange of Certificates . FFC shall take all steps
necessary to cause the Exchange Agent to mail, within five business
days after the Effective Time, to each holder of a Certificate or
Certificates who has not previously surrendered such Certificates
with an Election Form, a form letter of transmittal (which shall be
subject to the reasonable approval of ALFC) for return to the
Exchange Agent and instructions for use in effecting the surrender
of the Certificates in exchange for the Merger Consideration and
cash in lieu of fractional shares into which the ALFC Common Stock
represented by such Certificates shall have been converted as a
result of the Merger, if any. The letter of transmittal shall
specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent. Upon proper surrender of a
Certificate for exchange and cancellation to the Exchange Agent,
together with a properly completed letter of transmittal,
duly
executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the
Merger Consideration to which such holder of ALFC Common Stock
shall have become entitled pursuant to Section 3.1.3 hereof, and
the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on any Cash Consideration or any
cash payable in lieu of fractional shares or any unpaid dividends
and distributions, if any, payable to holders of
Certificates.
3.3.3
Rights of Certificate Holders after the Effective Time . The
holder of a Certificate that prior to the Merger represented issued
and outstanding ALFC Common Stock shall have no rights, after the
Effective Time, with respect to such ALFC Common Stock except to
surrender the Certificate in exchange for the Merger Consideration
as provided in this Agreement. No dividends or other distributions
declared after the Effective Time with respect to FFC Common Stock
shall be paid to the holder of any unsurrendered Certificate until
the holder thereof shall surrender such Certificate in accordance
with this Section 3.3. After the surrender of a Certificate in
accordance with this Section 3.3, the record holder thereof shall
be entitled to receive any such dividends or other distributions,
without any interest thereon, which theretofore had become payable
with respect to shares of FFC Common Stock represented by such
Certificate.
3.3.4
Surrender by Persons Other than Record Holders . If the
Person surrendering a Certificate and signing the accompanying
letter of transmittal is not the record holder thereof, then it
shall be a condition of the payment of the Merger Consideration
that: (i) such Certificate is properly endorsed to such Person or
is accompanied by appropriate stock powers, in either case signed
exactly as the name of the record holder appears on such
Certificate, and is otherwise in proper form for transfer, or is
accompanied by appropriate evidence of the authority of the Person
surrendering such Certificate and signing the letter of transmittal
to do so on behalf of the record holder; and (ii) the person
requesting such exchange shall pay to the Exchange Agent in advance
any transfer or other taxes required by reason of the payment to a
Person other than the registered holder of the Certificate
surrendered, or required for any other reason, or shall establish
to the satisfaction of the Exchange Agent that such tax has been
paid or is not payable.
3.3.5
Closing of Transfer Books . From and after the Effective
Time, there shall be no transfers on the stock transfer books of
ALFC of the ALFC Common Stock that was outstanding immediately
prior to the Effective Time. If, after the Effective Time,
Certificates representing such shares are presented for transfer to
the Exchange Agent, they shall be exchanged for the Merger
Consideration and canceled as provided in this Section
3.3.
3.3.6
Return of Exchange Fund . At any time following the six
month period after the Effective Time, FFC shall be entitled to
require the Exchange Agent to deliver to it any portions of the
Exchange Fund which had been made available to the Exchange Agent
and not disbursed to holders of Certificates (including, without
limitation, all interest and other income received by the Exchange
Agent in respect of all funds made available to it), and thereafter
such holders shall be entitled to look to FFC (subject to abandoned
property, escheat and other similar laws) with respect to any
Merger Consideration that may be payable upon due surrender of the
Certificates held by them. Notwithstanding the foregoing, neither
FFC nor the Exchange Agent shall be liable to any holder of a
Certificate for any Merger Consideration delivered in respect of
such Certificate to a public official pursuant to any abandoned
property, escheat or other similar law.
3.3.7
Lost, Stolen or Destroyed Certificates . In the event any
Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by
FFC, the posting by such person of a bond in such amount as FFC may
reasonably direct as indemnity against any claim that may be made
against it
with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration deliverable in
respect thereof.
3.3.8
Withholding . FFC or the Exchange Agent will be entitled to
deduct and withhold from the consideration otherwise payable
pursuant to this Agreement or the transactions contemplated hereby
to any holder of ALFC Common Stock such amounts as FFC (or any
Affiliate thereof) or the Exchange Agent are required to deduct and
withhold with respect to the making of such payment under the Code,
or any applicable provision of U.S. federal, state, local or
non-U.S. tax law. To the extent that such amounts are properly
withheld by FFC or the Exchange Agent, such withheld amounts will
be treated for all purposes of this Agreement as having been paid
to the holder of the ALFC Common Stock in respect of whom such
deduction and withholding were made by FFC or the Exchange
Agent.
|
|
3.4
|
Treatment of ALFC
Options.
|
3.4.1 At
the Effective Time, each option to purchase a share of ALFC Common
Stock that has been granted pursuant to the ALFC Stock Benefit Plan
(the "ALFC Option Plan") and that is outstanding and unexercised at
the Effective Time (whether or not such option is otherwise vested
or exercisable) (each, an "Outstanding ALFC Option") shall be
treated as follows:
(i)
Option Cashout. To the extent that the option holder does
not elect to convert the options pursuant to Section 3.4.1(ii),
such options shall be cancelled and shall cease to be exercisable.
In consideration for such cancellation, FFC shall, with respect to
each Outstanding ALFC Option, pay to the holder thereof an amount
equal to the excess (if any) of (a) the Cash Consideration over (b)
the price at which the holder may acquire a share of ALFC Common
Stock upon exercise of such Outstanding ALFC Option (the "Option
Cashout Payment"). FFC shall make such payment as soon as
practicable following the Effective Time or, if later in the case
of any holder of an Outstanding ALFC Option, the date on which such
holder delivers to FFC his written acceptance of an Option Cashout
Payment as full and complete consideration for the cancellation of
each Outstanding ALFC Option held by him. ALFC shall take such
action as is necessary or appropriate under the terms of ALFC's
Option Plan to convert each Outstanding ALFC Option, as of the
Effective Time, into the right to receive an Option Cashout Payment
upon the terms and conditions set forth herein. Payment hereunder
shall be subject to withholding for applicable federal, state and
local taxes; or
(ii)
Option Conversion. Each option holder may, by written notice
to FFC received by FFC not less than at least 10 business days
prior to the Effective Time, elect to have all or a portion of such
holder’s outstanding ALFC Options converted into options
("FFC Options") to purchase shares of FFC Common Stock. Any such
election shall identify the Outstanding ALFC Options to be
converted into FFC Options and shall become irrevocable upon
receipt by FFC of the notice of election. The Outstanding ALFC
Options identified in each such election shall be converted
automatically into options to purchase shares of FFC Common Stock
in an amount and at an exercise price determined as provided below,
and each ALFC Option shall otherwise remain subject to the ALFC
Option Plan and the agreements evidencing grants thereunder, and
any other agreements between ALFC and an optionee regarding ALFC
Options. The number of shares of FFC Common Stock (rounded down to
the nearest whole share) to be subject to the new option shall be
equal to the product of (i) the number of shares of ALFC
Common Stock subject to the
Outstanding ALFC Options being converted, and (ii) the Exchange
Ratio. The exercise price per share of FFC Common Stock under the
new option shall be equal to the quotient of the per share exercise
price of the Outstanding ALFC Option being converted divided by the
Exchange Ratio, rounded up to the next whole cent. The duration and
other terms of the new option shall be the same as the original
Outstanding ALFC Options being converted.
(iii) No
payment shall be made pursuant to subsection (i) of this Section
3.4.1 with respect to any portion of an Outstanding ALFC Option
that is converted into an FFC Option under subsection (ii) of this
Section 3.4.1. ALFC shall use its reasonable best efforts to obtain
the written acknowledgement of each holder of a then Outstanding
ALFC Option with regard to the treatment of such Outstanding ALFC
Option hereunder. FFC shall have the right to change the manner of
payment under this Section 3.4.1 provided that the consideration to
be paid to the holders of Outstanding ALFC Options pursuant thereto
is not reduced in amount.
3.4.2 As
of the Effective Time, FFC shall assume the obligations and succeed
to the rights of ALFC under the ALFC Option Plan. ALFC and FFC
agree that prior to the Effective Time the ALFC Option Plan shall
be amended, to the extent possible without requiring stockholder
approval of such amendments, (i) if and to the extent necessary and
practicable, to reflect the transactions contemplated by this
Agreement, including the conversion of the Outstanding ALFC Options
pursuant to Section 3.4.1 and the substitution of FFC for ALFC
thereunder to the extent appropriate to effectuate the assumption
of such ALFC Option Plan by FFC and (ii) to preclude any automatic
or formulaic grant of options thereunder on or after the date
hereof. From and after the Effective Time, all references to ALFC
(other than references to a “Change in Control” of
ALFC) in the ALFC Option Plan and in each agreement evidencing any
award of ALFC Options shall be deemed to refer to FFC, unless FFC
determines otherwise.
3.4.3 FFC
shall take all action necessary or appropriate to have available
for issuance or transfer a sufficient number of shares of FFC
Common Stock for delivery upon exercise of the Outstanding ALFC
Options being converted pursuant to Section 3.4.1(ii). Promptly
after the Effective Time, FFC shall prepare and file with the SEC a
post-effective amendment converting the Form S-4 to a Form S-8 (or
file such other appropriate form) registering a number of shares of
FFC Common Stock necessary to fulfill FFC’s obligations under
this Section 3.4.3.
ALFC and FFC shall use their best
efforts to cause Atlantic Liberty Savings, F.A. to merge with and
into Flushing Savings Bank, FSB, with Flushing Savings Bank, FSB as
the surviving institution, concurrently with, or as soon as
practicable after, the Effective Time. Following the execution and
delivery of this Agreement, FFC will cause Flushing Savings Bank,
FSB, and ALFC will cause Atlantic Liberty Savings, F.A., to execute
and deliver a Plan of Bank Merger substantially in the form
attached to this Agreement as Exhibit A.
|
|
3.6
|
Reservation of
Shares.
|
FFC shall reserve for issuance a
sufficient number of shares of the FFC Common Stock for the purpose
of issuing shares of FFC Common Stock to the ALFC stockholders in
accordance with this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
ALFC
ALFC represents and warrants to FFC
that the statements contained in this Article IV are correct as of
the date of this Agreement and will be correct as of the Closing
Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article
IV), except as set forth in the ALFC Disclosure Schedule delivered
by ALFC to FFC on the date hereof, and except as to any
representation or warranty which specifically relates to an earlier
date. ALFC has made a good faith effort to ensure that the
disclosure on each schedule of the ALFC Disclosure Schedule
corresponds to the section referenced herein. However, for purposes
of the ALFC Disclosure Schedule, any item disclosed on any schedule
therein is deemed to be fully disclosed with respect to all
schedules under which such item may be relevant as and to the
extent that it is reasonably clear on the face of such schedule
that such item applies to such other schedule. References to the
Knowledge of ALFC shall include the Knowledge of Atlantic Liberty
Savings, F.A.
No representation or warranty of
ALFC contained in this Article IV shall be deemed untrue or
incorrect, and ALFC shall not be deemed to have breached a
representation or warranty, as a consequence of the existence of
any fact, circumstance or event unless such fact, circumstance or
event, individually or taken together with all other facts,
circumstances or events inconsistent with any paragraph of Article
IV, has had or is reasonably expected to have a Material Adverse
Effect; provided, however , that the foregoing standard
shall not apply to representations and warranties contained in
Sections 4.2, 4.3 and 4.4, which shall be deemed untrue, incorrect
and breached if they are not true and correct in all material
respects.
4.2.1 ALFC
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is duly
registered as a savings and loan holding company under the HOLA.
ALFC has full corporate power and authority to carry on its
business as now conducted. ALFC is duly licensed or qualified to do
business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the
conduct of its business requires such qualification.
4.2.2 Atlantic
Liberty Savings, F.A. is a federally chartered stock savings
association duly organized, validly existing and in good standing.
The deposits of Atlantic Liberty Savings, F.A. are insured by the
FDIC to the fullest extent permitted by law, and all premiums and
assessments required to be paid in connection therewith have been
paid by Atlantic Liberty Savings, F.A. when due. Atlantic Liberty
Savings, F.A. is a member in good standing of the FHLB and owns the
requisite amount of stock therein.
4.2.3 ALFC
Disclosure Schedule 4.2.3 sets forth each ALFC Subsidiary. Each
ALFC Subsidiary is a corporation, limited liability company or
other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization.
4.2.4 The
respective minute books of ALFC, Atlantic Liberty Savings, F.A. and
each other ALFC Subsidiary accurately records, in all material
respects, all material corporate actions of their respective
stockholders and boards of directors (including
committees).
4.2.5 Prior
to the date of this Agreement, ALFC has made available to FFC true
and correct copies of the certificate of incorporation or charter
and bylaws of ALFC, Atlantic Liberty Savings, F.A. and each other
ALFC Subsidiary.
4.3.1 The
authorized capital stock of ALFC consists of 6,000,000 shares of
ALFC Common Stock, of which 1,682,347 shares are outstanding,
validly issued, fully paid and nonassessable and free of preemptive
rights, and 500,000 shares of preferred stock, $0.10 par value
(“ALFC Preferred Stock”), none of which are
outstanding. There are 28,637 shares of ALFC Common Stock held by
ALFC as treasury stock. Neither ALFC nor any ALFC Subsidiary has or
is bound by any Rights of any character relating to the purchase,
sale or issuance or voting of, or right to receive dividends or
other distributions on any shares of ALFC Common Stock or any other
security of ALFC or any securities representing the right to vote,
purchase or otherwise receive any shares of ALFC Common Stock or
any other security of ALFC other than as set forth in Disclosure
Schedule 4.3.1(a). Disclosure Schedule 4.3.1(a) sets forth: the
name of each holder of an award granted under any ALFC Stock
Benefit Plan, identifying the nature of the award; as to options to
purchase ALFC Common Stock, the number of shares each such
individual may acquire pursuant to the exercise of such options,
the grant, vesting and expiration dates, and the exercise price
relating to the options held; and the names of each holder of an
outstanding restricted stock award, the number of shares subject to
each award, and the grant and vesting dates.
4.3.2 ALFC
owns all of the capital stock of Atlantic Liberty Savings, F.A.,
free and clear of any lien or encumbrance. Except for the ALFC
Subsidiaries and as set forth in ALFC Disclosure Schedule 4.3.2,
ALFC does not possess, directly or indirectly, any material equity
interest in any corporate entity, except for equity interests held
in the investment portfolios of ALFC or any ALFC Subsidiary, equity
interests held by ALFC Subsidiaries in a fiduciary capacity, and
equity interests held in connection with the lending activities of
ALFC Subsidiaries, including stock in the FHLB. Either ALFC or
Atlantic Liberty Savings, F.A. owns all of the outstanding shares
of capital stock of each ALFC Subsidiary free and clear of all
liens, security interests, pledges, charges, encumbrances,
agreements and restrictions of any kind or nature.
4.3.3 To
ALFC’s Knowledge, other than the ALFC ESOP and except as set
forth on ALFC Disclosure Schedule 4.3.3, no Person is the
beneficial owner (as defined in Section 13(d) of the Exchange Act)
of 5% or more of the outstanding shares of ALFC Common
Stock.
4.3.4 No
bonds, debentures, notes or other indebtedness having the right to
vote on any matters on which ALFC’s stockholders may vote has
been issued by ALFC and are outstanding.
|
|
4.4
|
Authority; No
Violation.
|
4.4.1 ALFC
has full corporate power and authority to execute and deliver this
Agreement and, subject to the receipt of the Regulatory Approvals
described in Section 8.3, the approval of this Agreement by
ALFC’s stockholders and the amendment of Section 9 of the
Federal Stock Charter of Atlantic Liberty Savings, F.A. (it being
understood that Atlantic Liberty Savings, F.A. will take such
action to amend Section 9 of its Federal Stock Charter prior to the
Closing Date), to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by ALFC and the
completion by ALFC of the transactions contemplated hereby, up to
and including the Merger, have been duly and validly approved by
the Board of Directors of ALFC. This Agreement has been duly and
validly executed and delivered by ALFC, and subject to approval by
the stockholders of ALFC and receipt of the Regulatory Approvals,
constitutes the valid and binding obligation of ALFC, enforceable
against ALFC
in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally, and subject, as to
enforceability, to general principles of equity.
4.4.2 Subject
to compliance by FFC with the terms and conditions of this
Agreement, (A) the execution and delivery of this Agreement by
ALFC, (B) subject to receipt of Regulatory Approvals, and
ALFC’s and FFC’s compliance with any conditions
contained therein, and subject to the receipt of the approval of
the stockholders of ALFC, the consummation of the transactions
contemplated hereby, and (C) compliance by ALFC with any of the
terms or provisions hereof will not (i) conflict with or result in
a breach of any provision of the Certificate of Incorporation or
Bylaws of ALFC or any ALFC Subsidiary or the Federal Stock Charter
and Bylaws of Atlantic Liberty Savings, F.A., subject to amendment
of Section 9 of the Federal Stock Charter of Atlantic Liberty
Savings, F.A. (it being understood that Atlantic Liberty Savings,
F.A. will take such action to amend Section 9 of its Federal Stock
Charter prior to the Closing Date); (ii) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to ALFC or any ALFC Subsidiary or any of
their respective properties or assets; or (iii) violate, conflict
with, result in a breach of any provisions of, constitute a default
(or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of,
accelerate the performance required by, or result in a right of
termination or acceleration or the creation of any lien, security
interest, charge or other encumbrance upon any of the properties or
assets of ALFC or Atlantic Liberty Savings, F.A. under any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
investment or obligation to which ALFC or Atlantic Liberty Savings,
F.A. is a party (but not with respect to any benefit plan), or by
which they or any of their respective properties or assets may be
bound or affected, except for such violations, conflicts, breaches
or defaults under clause (ii) or (iii) hereof which, either
individually or in the aggregate, will not have a Material Adverse
Effect on ALFC and the ALFC Subsidiaries taken as a
whole.
Except for the Regulatory Approvals
referred to in Section 8.3 hereof and compliance with any
conditions contained therein, the approval of this Agreement by the
requisite vote of the stockholders of ALFC, and with respect to the
amendment of Section 9 of the Federal Stock Charter of Atlantic
Liberty Savings, F.A., no consents, waivers or approvals of, or
filings or registrations with, any Governmental Entity or Bank
Regulator are necessary, and, to ALFC’s Knowledge, no
consents, waivers or approvals of, or filings or registrations
with, any other third parties are necessary, in connection with (a)
the execution and delivery of this Agreement by ALFC, and the
completion by ALFC of the Merger or (b) the execution and delivery
of the Plan of Bank Merger by Atlantic Liberty Savings, F.A. and
the completion by Atlantic Liberty Savings, F.A. of the Bank
Merger. ALFC has no reason to believe that (i) any required
Regulatory Approvals or other required consents or approvals will
not be received, or that (ii) any public body or authority, the
consent or approval of which is not required or to which a filing
is not required, will object to the completion of the transactions
contemplated by this Agreement.
|
|
4.6
|
Financial
Statements.
|
4.6.1 ALFC
has previously made available to FFC the ALFC Financial Statements.
The ALFC Financial Statements have been prepared in accordance with
GAAP, and (including the related notes where applicable) fairly
present in each case in all material respects (subject in the case
of the unaudited interim statements to normal year-end adjustments)
the consolidated financial position, results of operations and cash
flows of ALFC and the ALFC Subsidiaries on a consolidated basis as
of and for the respective periods ending on the dates thereof, in
accordance with GAAP during the periods involved, except as
indicated in the notes thereto, or in the case of unaudited
statements, as permitted by Form 10-QSB.
4.6.2 At
the date of each balance sheet included in the ALFC Financial
Statements, ALFC did not have any liabilities, obligations or loss
contingencies of any nature (whether absolute, accrued, contingent
or otherwise) of a type required to be reflected in such ALFC
Financial Statements or in the footnotes thereto which are not
fully reflected or reserved against therein or fully disclosed in a
footnote thereto, except for liabilities, obligations and loss
contingencies which are not material individually or in the
aggregate or which are incurred in the ordinary course of business,
consistent with past practice, and except for liabilities,
obligations and loss contingencies which are within the subject
matter of a specific representation and warranty herein and
subject, in the case of any unaudited statements, to normal,
recurring audit adjustments and the absence of
footnotes.
4.7.1 (i)
ALFC, each ALFC Subsidiary and the ALFC Group has filed or caused
to be filed, and with respect to Tax Returns due between the date
of this Agreement and the date the Effective Time occurs, will
timely file (including any applicable extensions) all Tax Returns
required to be filed by the Code or by applicable state, local or
foreign Tax laws and all such Tax Returns are, or in the case of
such Tax Returns not yet filed, will be, true, complete and correct
in all material respects, and (ii) all Taxes of ALFC, the ALFC
Subsidiaries and the ALFC Group (whether or not reflected on any
such Tax Returns) attributable to a Pre-Effective Time Tax Period
have been, or in the case of Taxes the due date for payment of
which is between the date of this Agreement and the date the
Effective Time occurs, timely paid in full.
4.7.2 The
most recent audited financial statements for ALFC reflect an
adequate reserve for all Taxes payable by ALFC and the ALFC
Subsidiaries for all taxable periods and portions thereof through
the date of such financial statements, and, in the case of Taxes
owed as of the date hereof, an adequate reserve is (and until the
date the Effective Time occurs will continue to be) reflected in
the accruals for Taxes payable on the Balance Sheet, other than
accruals established to reflect timing differences and accruals
reflected only in the notes thereto.
4.7.3 There
are no liens for Taxes with respect to any of the assets or
properties of ALFC or any ALFC Subsidiary.
4.7.4 No
material Tax Return of ALFC, any ALFC Subsidiary or the ALFC Group
is under audit or examination by any other Taxing Authority, and no
notice of such an audit or examination has been received by ALFC or
any ALFC Subsidiary.
4.7.5 Each
deficiency, if any, resulting from any audit or examination
relating to Taxes by any Taxing Authority has been timely paid. No
issues relating to Taxes were raised by the relevant Taxing
Authority in any completed audit or examination that can reasonably
be expected to recur in a later taxable period. The relevant
statute of limitations is closed with respect to the Federal,
foreign and material state and local Tax Returns of ALFC, each ALFC
Subsidiary and the ALFC Group for all years through
2001.
4.7.6 None
of ALFC, any ALFC Subsidiary or the ALFC Group is a party to or is
bound by any Tax sharing agreement, Tax indemnity obligation or
similar agreement, arrangement or practice with respect to Taxes
(including, without limitation, any advance pricing agreement,
closing agreement or other agreement relating to Taxes with any
Taxing Authority),
other than as required by the OTS in
connection with Atlantic Liberty Savings, F.A.’s mutual to
stock conversion.
4.7.7 Neither
ALFC nor any ALFC Subsidiary will be required to include in a
taxable period ending after the date of the Effective Time any
taxable income attributable to income that accrued, but was not
recognized, in a Pre-Effective Time Tax Period (or the portion of a
Straddle Period allocable to the Pre-Effective Time Tax Period) as
a result of an adjustment under Section 481 of the Code, the
installment method of accounting, the long-term contract method of
accounting, the cash method of accounting, any comparable provision
of state, local, or foreign Tax law, or for any other
reason.
4.7.8 There
are no outstanding agreements or waivers extending, or having the
effect of extending, the statutory period of limitation applicable
to any Tax Returns required to be filed with respect to ALFC or any
ALFC Subsidiary, and none of ALFC, any ALFC Subsidiary or the ALFC
Group has requested any extension of time within which to file any
Tax Return, which return has not yet been filed. No power of
attorney with respect to any Taxes has been executed or filed with
any Taxing Authority by or on behalf of ALFC, any ALFC Subsidiary
or the ALFC Group.
4.7.9 ALFC
and each of the ALFC Subsidiaries have complied in all respects
with all applicable laws relating to the payment and withholding of
Taxes (including withholding of Taxes pursuant to
Sections 1441, 1442, 3121 and 3402 of the Code or any
comparable provision of any state, local or foreign laws) and have,
within the time and in the manner prescribed by applicable law,
withheld from and paid over to the proper Taxing Authorities all
amounts required to be so withheld and paid over under such
laws.
4.7.10 Neither ALFC
nor any ALFC Subsidiary has been a party to any distribution
occurring during the last three years in which the parties to such
distribution treated the distribution as one to which Section 355
of the Code applied.
4.7.11 Neither ALFC
nor any ALFC Subsidiary is a party to any “listed
transaction” as defined in Treasury Regulation
Section 1.6011-4(b)(2).
4.7.12 The
applicable Tax Returns of ALFC, the ALFC Subsidiaries and the ALFC
Group have disclosed any Tax positions of ALFC, the ALFC
Subsidiaries or the ALFC Group that, if not disclosed, could give
rise to penalties under Section 6662 of the Code.
4.7.13 ALFC
has not been, at any time during the applicable time period set
forth in Section 897(c)(1) of the Code, a United States real
property holding company within the meaning of Section 897(c)(2) of
the Code.
|
|
4.8
|
No Material Adverse
Effect.
|
Except as disclosed in ALFC’s
Securities Documents filed on or prior to the date hereof, ALFC and
the ALFC Subsidiaries, taken as a whole, have not suffered any
Material Adverse Effect since March 31, 2005 and no event has
occurred or circumstance arisen since that date which, in the
aggregate, has had
or is reasonably likely to have a
Material Adverse Effect on ALFC and the ALFC Subsidiaries, taken as
a whole.
|
|
4.9
|
Material Contracts; Leases;
Defaults.
|
4.9.1 Except
as set forth in ALFC Disclosure Schedule 4.9.1, neither ALFC nor
any ALFC Subsidiary is a party to or subject to: (i) any
employment, consulting or severance contract with any past or
present officer, director or employee of ALFC or any ALFC
Subsidiary, except for “at will” arrangements; (ii) any
plan or contract providing for bonuses, pensions, options, deferred
compensation, retirement payments, profit sharing or similar
material arrangements for or with any past or present officers,
directors or employees of ALFC or any ALFC Subsidiary; (iii) any
collective bargaining agreement with any labor union relating to
employees of ALFC or any ALFC Subsidiary; (iv) any agreement which
by its terms limits the payment of dividends by ALFC or any ALFC
Subsidiary; (v) any instrument evidencing or related to material
indebtedness for borrowed money whether directly or indirectly, by
way of purchase money obligation, conditional sale, lease purchase,
guaranty or otherwise, in respect of which ALFC or any ALFC
Subsidiary is an obligor to any person, which instrument evidences
or relates to indebtedness other than deposits, FHLB advances,
repurchase agreements, bankers’ acceptances, and
“treasury tax and loan” accounts established in the
ordinary course of business and transactions in “federal
funds” or which contains financial covenants or other
restrictions (other than those relating to the payment of principal
and interest when due) which would be applicable on or after the
Closing Date to FFC or any FFC Subsidiary; (vi) any other
agreement, written or oral, not terminable on 60 days’
notice, that obligates ALFC or any ALFC Subsidiary for the payment
of more than $25,000 annually; or (vii) any agreement (other than
this Agreement), contract, arrangement, commitment or understanding
(whether written or oral) that restricts or limits in any material
way the conduct of business by ALFC or any ALFC Subsidiary (it
being understood that any non-compete or similar provision shall be
deemed material).
4.9.2 Each
real estate lease that will require the consent of the lessor or
its agent as a result of the Merger or the Bank Merger by virtue of
the terms of any such lease is listed in ALFC Disclosure Schedule
4.9.2 identifying the section of the lease that contains such
prohibition or restriction. Subject to any consents that may be
required as a result of the transactions contemplated by this
Agreement, to its Knowledge, neither ALFC nor any ALFC Subsidiary
is in default in any material respect under any material contract,
agreement, commitment, arrangement, lease, insurance policy or
other instrument to which it is a party, by which its assets,
business, or operations may be bound or affected, or under which it
or its assets, business, or operations receive benefits, and there
has not occurred any event that, with the lapse of time or the
giving of notice or both, would constitute such a
default.
4.9.3 True
and correct copies of agreements, contracts, arrangements and
instruments referred to in Section 4.9.1 and 4.9.2 have been made
available to FFC on or before the date hereof, are listed on ALFC
Disclosure Schedule 4.9.1 and are in full force and effect on the
date hereof. Except as set forth in ALFC Disclosure Schedule 4.9.3,
no plan, contract, employment agreement, termination agreement, or
similar agreement or arrangement to which ALFC or any ALFC
Subsidiary is a party or under which ALFC or any ALFC Subsidiary
may be liable contains provisions which permit an employee or
independent contractor to terminate it without cause and continue
to accrue future benefits thereunder. Except as set forth in ALFC
Disclosure Schedule 4.9.3, no such agreement, plan, contract, or
arrangement (x) provides for acceleration in the vesting of
benefits or payments due thereunder upon the occurrence of a change
in ownership or control of ALFC or any ALFC Subsidiary or upon the
occurrence of a subsequent event; or (y) requires ALFC or any ALFC
Subsidiary to provide a benefit in the form of ALFC Common Stock or
determined by reference to the value of ALFC Common
Stock.
|
|
4.10
|
Ownership of Property; Insurance
Coverage.
|
4.10.1 Except
as set forth in ALFC Disclosure Schedule 4.10, ALFC and each ALFC
Subsidiary has good and, as to real property, marketable title to
all material assets and properties owned by ALFC or each ALFC
Subsidiary in the conduct of its businesses, whether such assets
and properties are real or personal, tangible or intangible,
including assets and property reflected in the balance sheet
contained in the most recent ALFC Financial Statements or acquired
subsequent thereto (except to the extent that such assets and
properties have been disposed of in the ordinary course of
business, since the date of such balance sheet), subject to no
material encumbrances, liens, mortgages, security interests or
pledges, except (i) those items which secure liabilities for public
or statutory obligations or any discount with, borrowing from or
other obligations to FHLB, inter-bank credit facilities, reverse
repurchase agreements or any transaction by an ALFC Subsidiary
acting in a fiduciary capacity, and (ii) statutory liens for
amounts not yet delinquent or which are being contested in good
faith. ALFC and the ALFC Subsidiaries, as lessee, have the right
under valid and existing leases of real and personal properties
used by ALFC and the ALFC Subsidiaries in the conduct of their
businesses to occupy or use all such properties as presently
occupied and used by each of them. Such existing leases and
commitments to lease constitute or will constitute operating leases
for both tax and financial accounting purposes and the lease
expense and minimum rental commitments with respect to such leases
and lease commitments are as disclosed in all material respects in
the notes to the ALFC Financial Statements.
4.10.2 With
respect to all material agreements pursuant to which ALFC or any
ALFC Subsidiary has purchased securities subject to an agreement to
resell, if any, ALFC or such ALFC Subsidiary, as the case may be,
has a lien or security interest (which to ALFC’s Knowledge is
a valid, perfected first lien) in the securities or other
collateral securing the repurchase agreement, and the value of such
collateral equals or exceeds the amount of the debt secured
thereby.
4.10.3 ALFC
and each Significant Subsidiary of ALFC currently maintain
insurance considered by each of them to be reasonable for their
respective operations. Neither ALFC nor any Significant Subsidiary
of ALFC has received notice from any insurance carrier that (i)
such insurance will be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to such
policies of insurance will be substantially increased. There are
presently no material claims pending under such policies of
insurance and no notices have been given by ALFC or any Significant
Subsidiary of ALFC under such policies. All such insurance is valid
and enforceable and in full force and effect, and within the last
three years ALFC and each Significant Subsidiary of ALFC has
received each type of insurance coverage for which it has applied
and during such periods has not been denied indemnification for any
material claims submitted under any of its insurance policies. ALFC
Disclosure Schedule 4.10.3 identifies all policies of insurance
maintained by ALFC and each Significant Subsidiary of ALFC as well
as the other matters required to be disclosed under this
Section.
Except as set forth in ALFC
Disclosure Schedule 4.11, neither ALFC nor any ALFC Subsidiary is a
party to any, and there are no pending or, to ALFC’s
Knowledge, threatened legal, administrative, arbitration or other
proceedings, claims (whether asserted or unasserted), actions or
governmental investigations or inquiries of any nature, (i) against
ALFC or any ALFC Subsidiary, (ii) to which ALFC or any ALFC
Subsidiary’s assets are or may be subject, (iii) challenging
the validity or propriety of any of the transactions contemplated
by this Agreement, or (iv) which could adversely affect the ability
of ALFC to perform under this Agreement, except for any proceeding,
claim, action, investigation or inquiry referred to in clauses (i)
and (ii) which, if adversely determined, individually or in the
aggregate, could not be reasonably expected to have a Material
Adverse Effect.
|
|
4.12
|
Compliance With Applicable
Law.
|
4.12.1 To
ALFC’s Knowledge, each of ALFC and each ALFC Subsidiary is in
compliance in all material respects with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable to it, its
properties, assets and deposits, its business, and its conduct of
business and its relationship with its employees, including,
without limitation, the Sarbanes-Oxley Act of 2002, the USA Patriot
Act, the Bank Secrecy Act, the Equal Credit Opportunity Act, the
Fair Housing Act, the Community Reinvestment Act of 1977
(“CRA”), the Home Mortgage Disclosure Act, and all
other applicable fair lending laws and other laws relating to
discriminatory business practices, and neither ALFC nor any ALFC
Subsidiary has received any written notice to the
contrary.
4.12.2 Each
of ALFC and each ALFC Subsidiary has all material permits,
licenses, authorizations, orders and approvals of, and has made all
filings, applications and registrations with, all Bank Regulators
that are required in order to permit it to own or lease its
properties and to conduct its business as presently conducted; all
such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and, to the Knowledge of
ALFC, no suspension or cancellation of any such permit, license,
certificate, order or approval is threatened or will result from
the consummation of the transactions contemplated by this
Agreement, subject to obtaining the approvals set forth in Section
8.3.
4.12.3 For
the period beginning January 1, 2003, neither ALFC nor any ALFC
Subsidiary has received any written notification or, to
ALFC’s Knowledge, any other communication from any Bank
Regulator (i) asserting that ALFC or any ALFC Subsidiary is not in
material compliance with any of the statutes, regulations or
ordinances which such Bank Regulator enforces; (ii) threatening to
revoke any license, franchise, permit or governmental authorization
which is material to ALFC or any ALFC Subsidiary; (iii) requiring
or threatening to require ALFC or any ALFC Subsidiary, or
indicating that ALFC or any ALFC Subsidiary may be required, to
enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement with any federal or state
governmental agency or authority which is charged with the
supervision or regulation of banks or engages in the insurance of
bank deposits restricting or limiting, or purporting to restrict or
limit, in any material respect the operations of ALFC or any ALFC
Subsidiary, including without limitation any restriction on the
payment of dividends; or (iv) directing, restricting or limiting,
or purporting to direct, restrict or limit, in any material manner
the operations of ALFC or any ALFC Subsidiary (any such notice,
communication, memorandum, agreement or order described in this
sentence is hereinafter referred to as a “Regulatory
Agreement”). Neither ALFC nor any ALFC Subsidiary has
consented to or entered into any Regulatory Agreement that is
currently in effect. The most recent regulatory rating given to
Atlantic Liberty Savings, F.A. as to compliance with the CRA is
satisfactory or better.
|
|
4.13
|
Employee Benefit
Plans.
|
4.13.1 ALFC
Disclosure Schedule 4.13.1 includes a descriptive list of all
existing bonus, incentive, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock
ownership, stock bonus, stock purchase, restricted stock, stock
option, stock appreciation, phantom stock, severance, welfare
benefit plans, fringe benefit plans, employment, severance and
change in control agreements and all other material benefit
practices, policies and arrangements maintained by ALFC or any ALFC
Subsidiary in which any employee or former employee, consultant or
former consultant or director or former director of ALFC or any
ALFC Subsidiary participates or to which any such employee,
consultant or director is a party or is otherwise entitled to
receive benefits (the “Compensation and Benefit
Plans”). Except as set forth in ALFC Disclosure Schedule
4.13.1, neither ALFC nor any of its Subsidiaries has any commitment
to create any additional Compensation and Benefit Plan or to
materially modify, change or renew any existing Compensation and
Benefit Plan (any modification or change that
increases the cost of such plans
would be deemed material), except as required to maintain the
qualified status thereof. ALFC has made available to FFC true and
correct copies of the Compensation and Benefit Plans and amendments
thereto.
4.13.2 Except
as disclosed in ALFC Disclosure Schedule 4.13.2, each Compensation
and Benefit Plan has been operated and administered in all material
respects in accordance with its terms and with applicable law,
including, but not limited to, ERISA, the Code, the Securities Act,
the Exchange Act, the Age Discrimination in Employment Act, COBRA,
the Health Insurance Portability and Accountability Act and any
regulations or rules promulgated thereunder, and all material
filings, disclosures and notices required by ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in
Employment Act and any other applicable law have been timely made
or any interest, fines, penalties or other impositions for late
filings have been paid in full. Each Compensation and Benefit Plan
which is an “employee pension benefit plan” within the
meaning of Section 3(2) of ERISA (a “Pension Plan”) and
which is intended to be qualified under Section 401(a) of the Code
has received a favorable determination letter from the IRS, and
ALFC is not aware of any circumstances which are reasonably likely
to result in revocation of any such favorable determination letter.
There is no material pending or, to the Knowledge of ALFC,
threatened action, suit or claim relating to any of the
Compensation and Benefit Plans (other than routine claims for
benefits). Neither ALFC nor any ALFC Subsidiary has engaged in a
transaction, or omitted to take any action, with respect to any
Compensation and Benefit Plan that would reasonably be expected to
subject ALFC or any ALFC Subsidiary to an unpaid tax or penalty
imposed by either Section 4975 of the Code or Section 502 of
ERISA.
4.13.3 Except
as set forth in ALFC Disclosure Schedule 4.13.3, no liability,
other than PBGC premiums arising in the ordinary course of
business, has been or is expected by ALFC or any ALFC Subsidiary to
be incurred with respect to any ALFC Compensation and Benefit Plan
which is a defined benefit plan subject to Title IV of ERISA
(“ALFC Defined Benefit Plan”), or with respect to any
“single-employer plan” (as defined in Section 4001(a)
of ERISA) currently or formerly maintained by ALFC or any entity
which is considered one employer with ALFC under Section 4001(b)(1)
of ERISA or Section 414 of the Code (an “ERISA
Affiliate”) (such plan hereinafter referred to as an
“ERISA Affiliate Plan”). Except as set forth in ALFC
Disclosure Schedule 4.13.3, no ALFC Defined Benefit Plan had an
“accumulated funding deficiency” (as defined in Section
302 of ERISA), whether or not waived, as of the last day of the end
of the most recent plan year ending prior to the date hereof.
Except as set forth in ALFC Disclosure Schedule 4.13.3, the fair
market value of the assets of each ALFC Defined Benefit Plan
exceeds the present value of the “benefit liabilities”
(as defined in Section 4001(a)(16) of ERISA) under such ALFC
Defined Benefit Plan as of the end of the most recent plan year
with respect to the respective ALFC Defined Benefit Plan ending
prior to the date hereof, calculated on the basis of the actuarial
assumptions used in the most recent actuarial valuation for such
ALFC Defined Benefit Plan as of the date hereof; and no notice of a
“reportable event” (as defined in Section 4043 of
ERISA) for which the 30-day reporting requirement has not been
waived has been required to be filed for any ALFC Defined Benefit
Plan within the 12-month period ending on the date hereof. Except
as set forth in ALFC Disclosure Schedule 4.13.3, neither ALFC nor
any of its Subsidiaries has provided, or is required to provide,
security to any ALFC Defined Benefit Plan or to any single-employer
plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the
Code or has taken any action, or omitted to take any action, that
has resulted, or would reasonably be expected to result in the
imposition of a lien under S
